As noted in Kevin Russell's earlier post, all three of the attorneys (representing the petitioner, the federal government, and the respondent) who took to the podium during the oral argument yesterday in Jones v. Harris Associates urged the Court to adopt the Gartenberg standard for determining whether an investment advisor had breached the fiduciary duty established by Section 36 of the Investment Company Act. They disagreed, however, on the narrower issue of how exactly the standard should be articulated to determine when fees charged to mutual fund shareholders by their advisers violate the law. Although the three advocates shared the load of hauling Gartenberg toward the finish line, members of the Court appeared to struggle to find a workable rule that would not anoint the judicial branch as the designated fee regulator.

One exchange during Monday's argument could signal that at least two Justices were willing to look beyond the standards proposed by the parties and the United States. First, Chief Justice Roberts raised questions the proper role of the Securities and Exchange Commission (SEC) in regulating the investment fees issue. He asked Assistant to the Solicitor General Curtis Gannon whether "[i]t makes a lot more sense to have the SEC regulate rates than to have the courts do it, doesn't it?" However, the idea of the SEC as the chief defender of mutual fund shareholders was not fully developed in the respondent's brief, but appeared instead in an amicus brief filed by the Mutual Fund Directors Forum on behalf of the respondent. The brief (which also embraces Gartenberg) highlights guidelines that the SEC has issued within the last decade with the intent to promote the independence of board members and protect shareholders.

Gannon declined to fully concede the Chief Justice's point. Instead, he responded that such a regime might make sense in the abstract, and he noted that the SEC does have the authority to file suit under Section 36. When asked by Justice Ginsburg whether the SEC had in fact filed any such suits, Gannon answered that none have been filed since 1980. Justice Ginsburg's question perhaps suggests skepticism of the SEC's interest in robustly regulating this area (and, in so doing, highlights the potential free-for-all that could ensue if the Court leaves the question of the appropriate standard for the SEC to resolve).

Justice Scalia concluded the exchange by advancing another argument found principally in the Forum's amicus brief. After asking whether the SEC was aware of the divergence in fees that investment advisers charge to their "captive" clients versus other clients, Justice Scalia noted that the SEC has not embraced Jones's suggestion that the fees charged to "captive" investors should be compared with those charged to independent investors. That lack of support, Justice Scalia posited, "suggests . . . that the SEC may think that this is indeed a self-contained industry and that the comparison with investment advice given to other entities is "“ is not a fair one." The Forum's brief quotes a 2004 SEC guideline that requires disclosure when a board relies on a comparison to fees paid under other investment advisory contracts, but it then notes: "[T]he amended disclosure requirements implemented by the release do not require this kind of comparison. Rather, they merely provide that, if the board in its discretion conducts the comparison, that fact must be disclosed."

It is, of course, impossible to draw firm conclusions from this colloquy. At most, it signals the impact made by a particular amicus brief, and a reluctance by the Chief Justice and Justice Scalia to insert courts into fee determinations. At the very least, it further highlights the fact that even when both parties and the federal government outwardly agreed on the Gartenberg standard, the Court is nevertheless tasked with a difficult line-drawing exercise.

Merits Case Pages and Archives

The court issued additional orders from the December 2 conference on Monday. The court did not grant any new cases or call for the views of the solicitor general in any cases. On Tuesday, the court released its opinions in three cases. The court also heard oral arguments on Monday, Tuesday and Wednesday. The calendar for the December sitting is available on the court's website. On Friday the justices met for their December 9 conference; Honeycutt v. United States.

Major Cases

Gloucester County School Board v. G.G.(1) Whether courts should extend deference to an unpublished agency letter that, among other things, does not carry the force of law and was adopted in the context of the very dispute in which deference is sought; and (2) whether, with or without deference to the agency, the Department of Education's specific interpretation of Title IX and 34 C.F.R. § 106.33, which provides that a funding recipient providing sex-separated facilities must “generally treat transgender students consistent with their gender identity,” should be given effect.

Bank of America Corp. v. City of Miami(1) Whether, by limiting suit to “aggrieved person[s],” Congress required that a Fair Housing Act plaintiff plead more than just Article III injury-in-fact; and (2) whether proximate cause requires more than just the possibility that a defendant could have foreseen that the remote plaintiff might ultimately lose money through some theoretical chain of contingencies.

Moore v. Texas(1) Whether it violates the Eighth Amendment and this Court’s decisions in Hall v. Florida and Atkins v. Virginia to prohibit the use of current medical standards on intellectual disability, and require the use of outdated medical standards, in determining whether an individual may be executed.

Pena-Rodriguez v. ColoradoWhether a no-impeachment rule constitutionally may bar evidence of racial bias offered to prove a violation of the Sixth Amendment right to an impartial jury.

Conference of December 9, 2016

FTS USA, LLC v. Monroe (1) Whether the Fair Labor Standards Act and the Due Process Clause permit a collective action to be certified and tried to verdict based on testimony from a small subset of the putative plaintiffs, without either any statistical or other similarly reliable showing that the experiences of those who testified are typical and can reliably be extrapolated to the entire class, or a jury finding that the testifying witnesses are representative of the absent plaintiffs; and (2) whether the procedure for determining damages upheld by the Sixth Circuit, in which the district court unilaterally determined damages without any jury finding, violates the Seventh Amendment.

Overton v. United States Whether, consistent with this Court's Brady v. Maryland jurisprudence, a court may require a defendant to demonstrate that suppressed evidence “would have led the jury to doubt virtually everything” about the government's case in order to establish that the evidence is material.

Turner v. United States (1) Whether, under Brady v. Maryland, courts may consider information that arises after trial in determining the materiality of suppressed evidence; and (2) whether, in a case where no physical evidence inculpated petitioners, the prosecution's suppression of information that included the identification of a plausible alternative perpetrator violated petitioners' due process rights under Brady.